Vietnam

Strengthening the Smallholder Robusta Sector in Indonesia

Indonesia is the fourth largest coffee producer worldwide. Despite its long-standing history in coffee production, farmers conduct farming practices that have the potential of improved efficiency.

The number of trees planted per hectare is often not ideal, and many trees have aged and are not well maintained, resulting in lower yields. The growers’ knowledge about coffee quality and the supply chain is limited. Additionally, the farming families have access to few support structures, and bear a changing climate that has resulted in repeated and severe shocks to their principal livelihood activity of coffee farming. The consequences: coffee quality and productivity are low, and farmer communities have little income from coffee. The potential to improve the livelihood of farmer households by quality and quantity increase, different financing schemes and market access is huge. All of these factors confirmed the International Coffee Partners in their decision to engage into project activities here.

Up until now, 21 farmer organizations have established their own group saving- and credit schemes and 15 of them elected their own marketing managers amongst them. These numbers are growing every month. Thanks to these first and second tier organization structures, the organizations managed to bulk market 100Mt of their coffee and directly sell it in Bandar Lampung, which is at least 10 hours’ drive from the producing areas. By training farmer groups on quality and providing market access, the farmers avoided the usual selling to local middlemen, resulting in better margins.

The latest update is that the first farmers have received a loan carrying about 6% interest rate per year, whereas lending from middlemen would give an interest rate of about 130% calculated over a full year.